Recruiter Gattaca PLC (LON:GATC) said short-term profits are likely to be hit by Brexit and the upcoming changes UK tax regulation on off-payroll working.
The engineering and IT recruitment firm reported softening markets in the first quarter of its current financial year and said it was remaining “cautious” about the coming months, with plans to increase investment in sales resources and to keep a selective approach on clients.
READ: Gattaca soars as first half profits rise and outlook maintained despite economic uncertainty
In the year to 31 July, revenue was up 1% to £635.8mln, while net debt stretched to £24.8mln from the previous year’s £40.9mln.
Profit before tax swung to £3mln from a loss of £26mln, following the closure of some operations in Asia and the Middle East and the withdrawal from some telecoms infrastructure contractor markets worldwide, now operationally complete although further costs will add to this year’s balance sheet.
Following these cuts, the firm will focus on operations in North America and the UK.
The company is undergoing an improvement plan, including a focus on core growth markets following a review of its international business, as well as changes in management.
In a separate announcement, Gattaca said chief operating officer Keith Lewis was leaving with immediate effect, after 26 years of service, but would not be replaced.
New house broker Liberum, beginning covering of the stock with a ‘hold’ recommendation and a target price of 125p, said that given the UK focus and Brexit uncertainty, "our estimates are cautiously set for now" but the investment in other senior staff and IT "should drive productivity".
Shares dropped 5% to 112p in early morning trading.